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Forrest wins High Court appeal

The court found Mr Forrest had not breached his obligations under the Corporations Act.

ABC News, file photo

Fortescue Metals chairman Andrew Forrest has won his High Court appeal against a Federal Court decision that would have seen him banned as a company director.

The Australian Securities and Investments Commission (ASIC) argued Fortescue, and its then chief executive Mr Forrest, had misled investors by announcing three deals with Chinese companies, when all that had been reached were framework agreements.

ASIC won the case in front of the full bench of the Federal Court, which found that Mr Forrest had misled investors with the announcements to the market about mining developments in the Pilbara.

The full bench of the Federal Court in that ruling overturned a previous finding by a single judge of the court that the corporate regulator had not made out a case that Mr Forrest misled investors.

However, the High Court has unanimously reversed the full Federal Court decision and backed the findings of the original judge.

Four of the five judges who heard the case found there was no evidential basis for assuming that a person who read or heard Fortescue's statements describing the agreements as "binding" contracts would think that they must be enforceable in an Australian court.

Furthermore, the court found that at the time the deals were made the parties to them all treated the agreements as binding.

Because the statements were therefore not misleading or deceptive, the court found neither Fortescue nor Mr Forrest had breached their obligations under the Corporations Act.

Fortescue's deputy chairman Herb Elliott says the court win is a major vindication after an eight-year process which ASIC thought was justified, but the court found to be wrong.

"ASIC's allegations have been an expensive distraction," he said in a statement.